If there’s one thing that can hold back most businesses, it's probably access to capital. Even businesses with a great leader, a great idea and a great team can be stymied by a lack of sufficient capital to stimulate growth. Once your business starts to stabilize and you have enough revenue to make meaningful investments, you might feel yourself overwhelmed with possibilities. Should you start investing in new laptops for your workers? Or make infrastructural improvements?
When it comes to equipment investments, the choices can be practically limitless. But upgrading or purchasing the right equipment first can help make a big difference in your short-term profitability as well as your long-term potential.
Your business might rely on niche equipment to continue operations. Just to list a few examples:
- A manufacturing plant that needs automated equipment to produce a consumer product
- A restaurant or cafe that needs cooking or production equipment to make food and beverages
- An IT firm that requires servers or other technical hardware to offer services
When it comes to niche equipment, it can be hard to give general advice, because so many different businesses may need different kinds of equipment—some may even need none at all.
As a practical rule, however, your first action item should be maximizing the products and services you already offer your customers. This can stand in contrast with adding equipment that would allow you to offer different products and services. For example, if you’re struggling with an unreliable oven in your restaurant, it makes sense to upgrade that first rather than buying a new cappuccino machine so you can add cappuccinos to your menu.
Your focus with niche equipment should be first on repairing what’s broken, second on improving what exists and finally on expanding into new territory.
Tech equipment can be necessary for almost any business operating today, whether you have dozens of employees with advanced processing power needs or just one computer in the back where you keep track of finances. Keeping this technology usable and backed up is probably of vital importance, above any peripheral niche equipment needs.
However, keeping your technology useful and functional may not imply that you need the latest, greatest models. If, for example, you’re using an iPhone 5, the upgrade to iPhone 6 might offer a bit more functionality, but it may not be worth the additional cost if there are other upgrades you can make.
Generally, you should consider upgrading your equipment and devices every three to five years, so everyone on your team is equipped with machines and devices that allow them to do their best work. Under this philosophy, productivity should be the bottom line. If your designer needs more RAM to be productive, that should take priority over any aesthetic upgrades you might be considering. Don’t get caught in the idea that newer and more expensive is always better—for example, it might be more cost effective to upgrade an older device than to buy a new one. Explore all your options and remember your bottom line.
Long-Term Efficiency Equipment
It may also be possible to make upgrades to your business that help save you money over time but offer little substantive value for improving customer relations or improving employee productivity. For example, a large manufacturing firm may choose to install solar panels in order to mitigate energy costs—over the course of many years and many sites, it may save hundreds of thousands or even millions of dollars this way.
However, as a small and growing business, this shouldn’t be your top priority. Though the cost savings of such an installation may be appealing, you should remember they only apply over the course of many years—in some cases, even decades. Your immediate cash on hand may be better spent improving some aspect of the business that will help you out in the short term. When you’ve achieved more stable growth and have access to more capital, then you can consider more expensive, long-term installations.
Finally, I want to mention that not all investments for a growing business need to be tangible. Equipment can help you increase your productivity and offer new products and services, but it may not improve the brains responsible for pushing your business forward. Often, the best long-term and short-term investment for small business may be in human capital—hiring new talent, and training or educating the people you already have on board. The better your team is, the better your business will likely do.
Ultimately, every business is unique, with unique needs, unique customers and a unique amount of money at its disposal. It may be impossible to give a general piece of advice on purchasing to every business. Instead, you should determine your needs, your wants and what’s going to help make the best long-term impact for your company.